The enterprise startup vision for tomorrow
The startups argue that lightweight, cloud-based tools, selected by end users rather than centralized IT departments, are the future of enterprise software.
This vision presents a future in which organizations buy software from a variety of vendors, each of which offers a specialized solution to a particular business problem. Because each solution is relatively small and focused, implementation times are short and pose less risk than traditional enterprise deployments.
In this scenario, enterprise buyers link these solutions together using pre-packaged, API-based, cloud-to-cloud integrations that are simpler to configure and cheaper to maintain than the customized integrations typical of on-premises software.
Indeed, lengthy and expensive implementations are a significant weak spot of traditional vendors and present serious problems for customers. Even my friend, Vinnie Mirchandani, a staunch enterprise guy if there ever was one, criticizes the established players for not listening to customers and doing a better job:
In the enterprise world, with dedicated account managers and teams, you would think the customer has much more access to vendor executives. The reality I suspect is there are many walls to break through and vendor executives are insulated from their customers.
In a talk before an audience in New York City, investor and (great) blogger, Fred Wilson, went even farther in his criticism of the incumbent vendors:
If I could short the entire big, fat, old, cynical, rip-off artist enterprise software business, I would. They're not innovating. There's nothing that those big companies do that's really any good. The caveat is it takes forever to rip out those systems.
Fred invests in startups that compete with the established vendors, so of course his comments are biased. However, despite the obvious hyperbole, he does speak some truth. When software vendors earn significant revenue from maintenance and support, rather than product sales, it's obvious that status quo, and not innovation, is the driving goal.
Although Fred is definitely correct that changing on-premises systems is hard, he does not mention that making business process changes with cloud-based software is almost as difficult. This is a critical point because process change issues, rather than technology, cause most enterprise software failures. In fairness, cloud projects tend to be smaller and more incremental, both of which lower project failure rates.